Correlation Between Universal Health and Mednax

Can any of the company-specific risk be diversified away by investing in both Universal Health and Mednax at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Universal Health and Mednax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Health Services and Mednax Inc, you can compare the effects of market volatilities on Universal Health and Mednax and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Universal Health with a short position of Mednax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Mednax.

Diversification Opportunities for Universal Health and Mednax

-0.8

Correlation Coefficient

Universal Health  Mednax

Pay attention - limited upside

The 3 months correlation between Universal and Mednax is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and Universal Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Universal Health Services are associated (or correlated) with Mednax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mednax Inc has no effect on the direction of Universal Health i.e., Universal Health and Mednax go up and down completely randomly.

Pair Corralation between Universal Health and Mednax

Considering the 90-day investment horizon Universal Health Services is expected to under-perform the Mednax. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Services is 1.69 times less risky than Mednax. The stock trades about -0.1 of its potential returns per unit of risk. The Mednax Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,066  in Mednax Inc on August 31, 2024 and sell it today you would earn a total of  411.00  from holding Mednax Inc or generate 38.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Universal Health Services  vs.  Mednax Inc

Universal Health Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mednax Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Mednax exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Health and Mednax

The main advantage of trading using opposite Universal Health and Mednax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Mednax can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mednax will offset losses from the drop in Mednax's long position.

The idea behind Universal Health Services and Mednax Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.